NOVEMBER 2017 / NO. 2
TAGS: CYCLES, PETER DRUCKER, WEAK SIGNALS, EARLY WARNINGS

Managing the present versus managing the Future

“There is an increased pressure by hedge funds on multinationals such as AkzoNobel, Unilever, Nestle, P&G, PostNL, KPN NL and some others. They promised to outperform in 2017, but in practice, however, they strongly underperformed”
“Those companies, as well as many other multinationals might be at the end of their Company Life-Cycle”, Professor Dr. Jaap Koelewijn of Nyenrode University, July 2017
Professor Jaap Koelewijn’s quote is telling, pointing out that a number of multinationals may be reaching the end of their company life-cycle. The financial press reports that an increasing number of hedge funds put heavy pressure on those boards of management to divest and/or to split up their companies to meet shareholder value. Management’s answer throughout 2017 has typically been to make ‘unrealistic’ promises that they will somehow succeed in meeting shareholder expectations. In addition, they took the easy and relatively straightforward way forward of cost-cutting and increasing consumer prices.

What then is the real problem?

If those companies are not able to outperform the market, then something must be terribly wrong! Competition from regional, smaller, decisive, and entrepreneurial-driven companies is increasing, with alternative products/brands being offered which are perceived by consumers as preferable. We recognized some years ago that product managers, brand managers, marketing managers, and ‘insight managers of all sorts’, focus too much on customer experiences, consumer research, net promoter scores, and most recently on big data and big-data analytics.
Peter Drucker, one of the most influential management consultants since WWII, always stated that companies have to execute two different strategies: the first is to defend the existing business with existing customers, but the second is to develop entrepreneurial strategies to meet unmet customer needs and to meet non-customers. After all, the number of non-customers far exceeds the number of customers!

What is the solution?

The solution lies in the difference between ‘managing the present’ and ‘managing the future’. It derives from the difference between ‘the management of comfort zones and preservation’ and ‘the management of uncertainty, risk and creation’. To explain this in more detail:
  1. Managing the present involves: management of KPIs, unambiguous, objective data regarding linear changes affecting current customers, current and known technologies, resulting in linear innovations contributing to the reduction of risk, the elimination of ambiguity and deviation, and efficiency
  2. Managing the future involves: management of weak signals and early warnings, Grey Swans, Gray Rhinos regarding non-linear changes affecting non-customers, non-traditional competitors, and new and emerging technologies resulting in non-linear innovation. This requires challenging assumptions, building new competencies, embracing risk-taking, learning, adaption and flexibility.
The aim of our core business, strategic intelligence, is to timely identify the weak signals and early warnings concerning customer and technological discontinuities, non-traditional competitors, new distribution channels, and regulatory changes, all in a timely fashion. Strategic intelligence provides the answers to almost every problem of crucial concern to senior management. However, as has long been quoted: “if generals cannot manage without good intelligence, why do CEOs think they can”.

“A clear strategic direction is a concise set of choices that determines what we do and don’t do”

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